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HKEx : 0762 | NYSE : CHU www.chinaunicom.com.hk 12 August 2020 INTERIM RESULTS

INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

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Page 1: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

HKEx : 0762 | NYSE : CHUwww.chinaunicom.com.hk

12 August 2020

INTERIMRESULTS

Page 2: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Forward-looking Statements

2020 Interim Results 2

Certain statements contained in this presentation may be viewed as “forward-looking statements” withinthe meaning of Section 27A of the U.S. Securities Act of 1933 (as amended) and Section 21E of the U.S.Securities Exchange Act of 1934 (as amended). Such forward-looking statements are subject to known andunknown risks, uncertainties and other factors, which may cause the actual performance, financialcondition or results of operations of the Company to be materially different from any future performance,financial condition or results of operations implied by such forward-looking statements. In addition, we donot intend to update these forward-looking statements. Further information regarding these risks,uncertainties and other factors is included in the Company’s most recent Annual Report on Form 20-F filedwith the U.S. Securities and Exchange Commission (the “SEC”) and in the Company’s other filings with theSEC.

Page 3: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Management Present

Mr. He Biao Senior Vice President

Mr. Wang Xiaochu Chairman & CEO

Mr. Mai Yanzhou Senior Vice President

Mr. Liang Baojun Senior Vice President

Mr. Zhu Kebing Executive Director & CFO

Mr. Fan Yunjun Executive Director & Senior Vice President

Page 4: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Overall results

Financial performance

Page 5: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Highlights

2020 Interim Results 5

Adjustments in mobile development priority delivered initial success

Fixed-line business re-ignited rapid growth by empowering government & enterprise customers

Innovative businesses continued to grow robustly with huge value embedded

Successfully achieved 5G network “co-build co-share”, effectively enhancing edges & return

5

To push forward comprehensive digital transformation to firmly promote high-quality development

Sustainably enhanced growth quality & profitability through active transformation & in-depth mixed-ownership reform

Page 6: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Note: Unless otherwise stated in this presentation, 1. Service revenue = operating revenue – sales of telecommunications products. 2. EBITDA = profit for the period before finance costs, interest income, share of net profit of associates, share of net profit of joint ventures, other income - net, income tax,

depreciation & amortisation. 3. Net profit represented profit attributable to equity shareholders of the Company.4. Industry data sourced from MIIT website.

Resilient Results amid Epidemic

2020 Interim Results 6

(RMB Mil) 1H2019 1H2020 Change YoY

Service Revenue1 132,957 138,335 4.0%

Industry Internet Revenue 16,718 22,673 35.6%

EBITDA2 49,507 49,452 -0.1%

As % of Service Revenue 37.2% 35.7% -1.5pp

Net Profit3 6,877 7,569 10.1%

Basic EPS (RMB) 0.225 0.247 10.1%

Precise control & prevention of the epidemic, while accelerating comprehensive digital transformation

Innovating communications service offerings to turn adversity into opportunities

Outperformed industry revenue

growth4 of3.2% yoy

& GDP growth of

-1.6% yoy

Page 7: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Net Profit(RMB Bil)

5.91

6.88

1H2018 1H2019 1H2020

Growth Quality & Return Continued to Improve

2020 Interim Results 7

8.7%

12.6%

16.4%

1H2018 1H2019 1H2020

Industry Internet Revenueas % of Service Revenue

Cumulative Free Cash Flow1

(RMB Bil)

42.9

90.4

116.8 133.6

2017 2018 2019 1H2020

Note:1. Calculated the cumulative free cash flow generated since 2017, and excluded the impact of the adoption of IFRS 16 on free cash flow in 2019 & 1H2020, i.e. free cash flow = operating cash flow – CAPEX – capital element

of lease rentals paid

Focus · Innovation · Cooperation · Proactive Transformation

Service revenue mix further optimised Sustained profit growthFCF >RMB100 Bil over the past years

7.57

Page 8: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Adjustments in Mobile Development Priority Delivered Initial Success

2020 Interim Results 8

• Strengthened self-discipline on rational & orderly competition to deepen value-oriented operation

• Shifted focus from subscriber scale to quality & value

• Continued to strengthen Internet-oriented transformation & innovative differentiated operations

• Rigorously controlled customer acquisition cost, ineffective & low-value products & channels

• Stepped up 5G customer acquisition in a paced & targeted manner

Mobile ARPU & service revenue turned around

Mobile subs:8.95 Mil

Selling & marketing expenses

RMB 2.58 Bil

Mobile service revenue RMB 2.18 Bil

1H 2020

Value

39.0 38.6

37.7

38.8

40.1 40.1 40.0

41.8

3Q2019 4Q2019 1Q2020 2Q2020Mobile ARPU (RMB)

Mobile Service Revenue (RMB Bil)

Page 9: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Mobile ARPU & Revenue Trended Steady-to-Rising

2020 Interim Results 9

• Promote consumption upgrade through 5G innovative applications

• Leverage privileges, content & financial tools to improve product value, while strongly enhancing pan-integration penetration

• Step up promotion of new products integrating “communication capability + smart hardware + content & applications”

• Optimise performance management system & deploy Big Data analytics to enhance targeted marketing & customer retention

YoY Growth Re-emerged

-4.1%-3.3%

-2.1%

1Q2020 4.2020 5.2020 6.2020 7.2020

Mobile Service Revenue Growth (YoY)

1.0%

2H2020

1.6%

Accelerate 5G subscriber growth Sustain growth in ARPU & service revenue

5G network deployment accelerationProliferation & declining price of 5G terminals

More prevalent innovative applications

Page 10: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

New Growth Engine in a New Era

• “New Infrastructure” policy & the epidemic further boosted demand for digitisation, cyberisation & intelligent transformation of the economy & society

• Broadly integrated development of innovative and fundamental businesses for mutual promotion

• Actively leveraged proprietary resources & edges to empower government & enterprise customers and enhance family customer experience & value

• 3 “gigabit-network” resources

• “Cloud + networks + applications” integrated servicing capability

• Innovative business servicing capability

• Better customer insights brought by the long-term & well-established relationship with government & enterprise customers

• Mixed-ownership reform advantages

32%

11%16%

41%1H2020

fixed-line service revenue

Broadband access &smart home

products

10.2%

IDC, IT services &cloud computing

32.7%

Leased line service

2.9%Others

1.6%

Rapid fixed-line business growth re-ignited

2020 Interim Results 10

Fixed-line Service Revenue(RMB Bil)

49.1 53.1

60.6 36.5%40.0%

1H2018 1H2019 1H2020As % of service revenue

43.8%

Page 11: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

• Promoted the new integrated sales model (“cloud + smart networks + smart applications”), focusing on key industries application products

• Established innovative mechanism segregated from fundamental service, strengthened incremental return sharing mechanism, piloted core employee stock ownership scheme & profit sharing incentive for tech positions

• Strengthened innovative talent development with over 7k talents; recruited leading talents of CTO & senior architects at subordinate companies on a market-oriented basis

• Deepened business cooperation with strategic investors & industry leaders, with a number of JVs established, creating powerful alliance & synergisingedges

• Enhanced product standardisation & scale replication to expand margin progressively

• Actively nurture innovative 5G + vertical applications

Strong Growth Momentum of Innovative Businesses

2020 Interim Results 11

11.7

16.7

22.7

1H2018 1H2019 1H2020

Industry Internet Revenue(RMB Bil)

Page 12: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

IDC Business – Capture “New Infrastructure” Strategic Opportunities

2020 Interim Results 12

6.98.2

10.1

1H2018 1H2019 1H2020

IDC Revenue1

(RMB Bil)Competitive advantages:

• Actively leverage integrated servicing edges (IDC + cloud + networks + applications) to offer total solutions

• Remarkable cost efficiency backed by the Group’s extensive resources & capabilities, e.g. network infrastructure, operation & maintenance, marketing, etc.

• 551 IDCs nationwide with centralised operation yield significant scale benefits & well-positioned to answer rising demand of CDN & MEC

• Key customers include our strategic investors (such as Tencent, Alibaba, Baidu, JD.com), financial institutions & government entities, etc.

• 2020E CAPEX & capacity pipeline: RMB2 Bil (focusing on high value and high demand areas), with >1/2 of new cabinets located in tier-1 cities

• 1H2020 average utilisation rate: >60%

Note:1. IDC revenue included IDC outbound bandwidth revenue.

234277

2019 2020E

No. of cabinets(thousand)

Tier-1 cities

36% 39%

Page 13: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Government & Enterprise Business Achieved Scale Breakthrough

2020 Interim Results

• Focused on key industries & key regions

• Launched “5G Lighthouse Initiative” to appeal & engage with industry-leading customers, while exploring innovative 5G business model

• Strengthened the centralised operation & unified platform for cloud computing, Big Data, IoT, AI & network security, enhancing the replicated use of fundamental capabilities to improve margin and delivery efficiency

• Enhanced R&D centralisation & product standardisation to push forward scale development & efficiency improvement

• Stepped up proprietary integration delivery capabilities to create differentiated edges

13

Integrated business model of “cloud + smart networks + smart applications” promoted the mutual development of innovative business & fundamental business

Cloud Computing Revenue

82% YoY

Government & EnterpriseRevenue

14% YoY

Leased Line Service Revenue

3% YoY

Page 14: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

10.3 10.6

10.8 11.1

41.0 42.0

42.7 43.3

3Q2019 4Q2019 1Q2020 2Q2020

Fixed-line Broadband Access ARPU(RMB)

• The epidemic prompted demand for broadband network deployment & speed upgrade

• Adhered to rational & disciplined competition while promoting “3 gigabit integrated products” (gigabit 5G, gigabit broadband & gigabit Wi-Fi) in incumbent regions in Northern China & provincial capitals in Southern China

• Further raised network utilisation & deeply pushed forward broadband cooperation in Southern China

• Advanced the promotion of smart home products: WO Family “fixed-line”, “smart surveillance”, “video platform” & “home network deployment” to drive broadband access business, while facilitating other revenue growth (revenue in 1H2020: RMB2.7 Bil, 63% YoY)

• Focus on creating new edges such as integrated operation of marketing, maintenance & service, synergised operation of business & network

Broadband Service Sustained Positive Trend

2020 Interim Results 14

Fixed-line Broadband Access Revenue(RMB Bil)

Showcasing high-speed & smart home products advantages

Page 15: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

5G Network Deployment

2020 Interim Results 15

• Added ≈150k 5G BTS, co-built & co-shared with China Telecom

• Achieved contiguous coverage in >50 cities with 210k 5G BTS, of which China Unicom built >100k

• Certain provinces successfully upgraded 4G BTS to 5G BTS by software at 2.1GHz band, while equipped with 3G / 4G / 5G functions through SDR

• 5G network upgrade to SA (standalone), assuring commercialisation in 4Q2020

• Co-build & co-share 250k 5G BTS with China Telecom , targeting to complete by end of 3Q2020

• >300k 5G BTS in service covering all prefectural cities nationwide

• Sharing of 300MHz of contiguous spectrum in 3.3-3.6GHz band, mainly for city coverage: 200MHz for outdoor (max.) & 300MHz for indoor (max.)

• Promote hybrid network deployment at 2.1GHz & 3.5GHz bands to enhance network capability and lower TCO (total cost of ownership)

≈RMB12.6 Bil ≈RMB35.0 Bil1H20205G CAPEX

2020E5G CAPEX

Maintain focused deployment, while fully leveraging “co-build co-share” advantages

Achieve 5G network quality comparable with the leading operator

Dynamic investment with due regard to technology advancement, value chain maturity, market & business demand, etc.

5G

Page 16: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Successfully Achieved 5G Network “Co-build Co-share”

2020 Interim Results 16

Network deployment pace, coverage & speed ALL DOUBLE

> RMB 40 Bil in CAPEX savings for the two operators combined

Substantial savings in OPEX including tower usage fee, network maintenance costs & utility charges for both parties

Expand “co-build, co-share & co-maintenance” with China TelecomDrive 4G network sharing in scale to fast rectify network shortcoming economically to support business development

Promote “co-build, co-share & co-maintenance” of transmission resources such as pole lines, pipelines, etc.

• Achieve 5G network scale, coverage & quality comparable with the leading operator

• Spectrum sharing to achieve the world’s prevailing fastest network

speed of low-to-mid bandwidth: 2.7Gbps• Boost 5G customer experience & partners’ confidence

Effectively Sharpen Edges & Return with Win-win

Page 17: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

5G – Consumer Market

2020 Interim Results 17

Assuring customer value & experience enhancement: promoted 5G packages in a paced & targeted manner aligning with the progress of 5G network deployment & 5G handset supply

5G

Build 5G capability aggregation & open platform; leverage innovative cooperative model to drive featured services such as HD/4K/8K video, AR/VR, cloud gaming, etc.

Promote extensive value-chain cooperation to build a 5G pan-smart device ecosystem, integrating “device + content + application” to empower consumer Internet market development

5G terminal ASP continues to decline and gains adoption. 5G handset shipment rose to 61% of the overall handset shipment in China in June 2020

Focus on 5G touchpoint & integrated O2O multi-dimensional scenario targeted marketing

5G subscribers grew steadily as planned in 1H2020

5G subscriber growth sets to accelerate in 2H2020, as 5G network, terminal & applications gain maturity

Page 18: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

2020 Interim Results 18

162 92

70

5G lighthouse customers

commercial contracts

showcase projects

5G – Government & Enterprise Customer Market

• Successfully commercialised a number of 5G lighthouse projects in industrial Internet, smart cities, healthcare, transportation & logistics, new media, energy & mining, etc.

• Accelerate industry products incubation - “integration + operation" products, “smart connection + data traffic" products, “open platform + application" products

• Promote industry eco-system with solid development of "China Unicom 5G Application Innovation Alliance” to empower customers

• Incorporate 5G + ABC elements into industry solutions to create competitive advantages

Mid-to-long-term: huge growth potential for 5G government & enterprise application revenue

~800alliance

members

Page 19: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

China Unicom 5Gn Unique Edges

2020 Interim Results 19

Efficiently enhance edges & return with 5G network “co-build co-share”

Potential collaboration with 14 strategic investors & benefits from market-oriented system & mechanism reform, leveraging mixed-ownership reform

促进未来收入和价值提升

Established long-term relationship with government & enterprise customers; innovative business capabilities

1+1>2

Centralised IT system supports open cooperation• 100% user to be migrated to cBSS

system by end of the year

To drive revenue growth & value enhancement in future

Well-established Internet-oriented mindset & operation • 2I2C

• O2O omni-channel sales & marketing synergy

• Cloud-network integration and “four advancements” of networks

Page 20: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Promote High-quality Development

20

To push forward comprehensive

digital transformation

Returns

Competitiveness

Efficiency

Smart network transformation• “Four advancements” of networks• Cloud-network integration• Co-build & Co-share

Government & enterprise customer service transformation• Platform-based capability • Product standardisation• Centralised R&D • Proprietary integration delivery

Product & channel operation transformation• Internet-oriented products• O2O integration

System & mechanism transformation• Structural reform in the areas of

marketing, government & enterprise service & network

• Sub-division reform in all production scenarios

IT capability transformation• Centralised IT edges• Construction of smart middle office

Accelerate China Unicom’s “Five New” establishment

Fully unleash the advantages of mixed-ownership reform

Persistent in deepening the Strategy of Focus, Innovation & Cooperation

2020 Interim Results

Returns ·

Competitiveness·

Efficiency

Returns ·

Competitiveness·

Efficiency

Page 21: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Overall results

Financial performance

Page 22: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Key Financial Information

2020 Interim Results 22

(RMB Mil) 1H2019 1H2020 Change YoY

Operating Revenue 144,954 150,397 3.8%

Operating Expenses (137,238) (142,257) 3.7%

Operating Profit 7,716 8,140 5.5%

Finance Costs (1,180) (859) -27.2%

Interest Income 645 682 5.7%

Share of Net Profit of Associates1 689 732 6.2%

Share of Net Profit of Joint Ventures2 326 257 -21.1%

Other Income – Net 543 784 44.3%

Income Tax (1,849) (2,138) 15.7%

Net Profit 6,877 7,569 10.1%Note:1. Share of net profit of associates mainly included share of net profit of China Tower Corporation Limited.2. Share of net profit of joint ventures mainly included share of net profit of Merchants Union Consumer Finance.

Page 23: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

(RMB Mil) 1H2019 1H2020 ChangeYoY

Operating Expenses (137,238) (142,257) 3.7% • Growth rate lower than operating revenue growth rate

Interconnection Charges (5,779) (5,094) -11.9% • Mainly due to decline in interconnection voice traffic

Depreciation & Amortisation (41,791) (41,312) -1.1% • Mainly benefited from good control of CAPEX in recent years

Network, Operation & Support (20,800) (22,220) 6.8% • Mainly due to growth in charges for the use of premises & equipment &

towers

- Tower Usage Fee1 (5,106) (5,452) 6.8% • Mainly due to the expansion of network scale

Employee Benefit (25,192) (27,503) 9.2%• Mainly due to the ongoing effort in incentive mechanism reform to

strengthen performance-based compensation & the growth of innovative talents

Costs of Telecommunications Products Sold (12,391) (11,603) -6.4% • Mainly benefited from strengthened value management

- Handset Subsidy (615) (4) -99.3% • Mainly benefitted from the innovative business model

Selling & Marketing (17,458) (14,879) -14.8% • Mainly benefitted from the business model transformation to rigorously control customer acquisition cost

G&A & Others (13,826) (19,646) 42.1% • See next slide for details

Effective Cost Control

2020 Interim Results 23

Note: 1. Excluding the impact of the adoption of IFRS 16, 1H2020 tower usage fee was RMB 9,295 mil, up 5.6% yoy. The data is for illustration purpose only and investors are cautioned not to rely on the data.

Page 24: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Appropriately Stepped up Initiatives to Fuel Rapid Development of Innovative Businesses

2020 Interim Results 24

1H2019 1H2020

Technical support expenseCost of IT servicesAdministrative expenses & others

4.89

6.12

8.64

Capitalise on the opportunities of digital transformation to enhance capabilities & promote scale development

13.83

19.65

G&A & Other Operating Expenses (RMB Bil)

2.39

4.46

6.9737% 39% Cost of

IT servicesIT services revenue

4.2 BilTechnical support

expense +

Cost of IT services

RMB

+Enhanced capabilities

6.0 BilRapid growth of Industry Internet

revenue RMB

YoY YoY

Page 25: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Efficient & Precise Investment to Create Value

2020 Interim Results 25

2020E

• Mobile network: Comprehensively push forward 5G network “co-build co-share” with China Telecom

Further improve LTE 900MHz coverage & suspend other 4G investment & projects of no business urgency

Promote 2/3G network simplification by regions to lower network operating costs & refarm spectrum

• Broadband network: Focus on gigabit access, while maintaining leading network coverage in Northern China & expanding the scale through private capital cooperation in Southern China

• Expedite intelligent network upgrade by advancing SDN, NFV & cloudification

• 1H2020: Network quality & customers’ perception on the rise in focused regions

• Real-time satisfaction rate for mobile & broadband up by 0.46 & 0.67 points respectively from the beginning of the year

• Industry-best network latency performance

强化网业协同,提升用户感知,促进业务发展Strengthen the synergy between business & network to enhance customer perception & business growth

61%

15%

24%

1H2020:RMB25.8 Bil

CAPEX Structure

57%14%

29%

Mobile networkFixed-line broadband & dataInfrastructure, transmission & others

2020E:≈RMB70.0 Bil

Page 26: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Strong Financial Position

2020 Interim Results 26

43.8%40.3% 39.9%

6.2018 6.2019 6.2020

Liabilities-to-Assets Ratio

51.1

30.3

20.5

6.2018 6.2019 6.2020

Interest-bearing Debts(RMB Bil)

Healthy free cash flowWell-positioned to capturenew 5G opportunities & create new value

Interest-bearing debts declining

Note: 1. The above 6.2019 & 6.2020 data excluded the impact of the adoption of IFRS 16. It is for illustration only & investors are advised not to rely on the above data.

Page 27: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

To Elevate Shareholder Value through Quality & Efficiency Enhancement

2020 Interim Results 27

Deepen network & business integration

with precise investment to enhance

the edges of cloud-network integration

Strengthen centralised IT

operation & data governance to boost overall IT efficiency

Accelerate operating model transformation, to foster pan-marketing coordinated operation &

high quality development

Continue to promote value management

leveraging innovative revitalisation of operating assets & enhancement of

talent performance

Strengthen cash flow management and

promote transformation of resources allocation &

use to enhance productivity of all essential factors

Page 28: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Thank You !

Asia's No.1 Most Honored

Telecom Company

Asia's Best Corporate

Governance

Page 29: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

(RMB Mil) 1H2019 1H2020 Change YoY

Mobile Service Revenue 78,691 76,516 -2.8%

Voice 15,403 12,839 -16.7%

Data Traffic 51,341 52,057 1.4%

Others 11,947 11,620 -2.7%

Fixed-line Service Revenue 53,134 60,566 14.0%

Voice 5,011 4,410 -12.0%

Broadband Access 20,646 21,874 5.9%

Others1 27,477 34,282 24.8%

Other Service Revenue 1,132 1,253 10.7%

Sales of Telecommunications Products 11,997 12,062 0.5%

Total 144,954 150,397 3.8%Note: 1. Mainly included revenue from IDC (1H2020: RMB 10,071 mil), IT services (1H2020: RMB 7,549 mil), cloud computing (1H2020: RMB 1,999 mil), leased line services (1H2020: RMB 6,961 mil) & others.

Appendix I: Revenue Breakdown

2020 Interim Results 29

Page 30: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Appendix II: Extracts from Unaudited Condensed Consolidated Interim Statement of Financial Position

2020 Interim Results 30

(RMB Mil) As at2019.12.31

As at2020.6.30

Current Assets 83,595 103,511

Non-current Assets 478,904 465,223

Total Assets 562,499 568,734

Current Liabilities 205,190 212,193

Non-current Liabilities 36,554 33,388

Total Liabilities 241,744 245,581

Total Equity 320,755 323,153

Page 31: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Unit 1H2019 1H2020

Mobile Business1

Billing Subscribers Mil 324.353 309.528

Billing Subscriber ARPU RMB 40.8 40.9

Total Handset Data Traffic Bil MB 14,602.7 18,025.6

Handset User DOU GB 7.4 9.4

Handset User MOU Mins 193.9 166.4

Incl: 4G1

Subscribers Mil 238.939 260.741

ARPU RMB 45.9 42.9

DOU GB 10.3 11.4

Fixed-line Broadband Business

Subscribers Mil 83.413 85.878

Access ARPU RMB 41.8 43.0

Fixed-line Local Access Business

Subscribers Mil 54.319 52.119

ARPU RMB 13.1 10.9

Appendix III: Key Operating Metrics

31

Note: 1. Mobile business data includes 5G subscribers

2020 Interim Results

Page 32: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

(RMB Bil) 1H2019 1H2020 Change YoY

IDC 8.24 10.07 22.2%

IT Services 5.45 7.55 38.6%

Internet of Things 1.40 2.17 54.8%

Cloud Computing 1.10 2.00 81.7%

Big Data 0.53 0.89 67.4%

Total 16.72 22.67 35.6%

Appendix IV: Industry Internet Revenue Breakdown

2020 Interim Results 32

Page 33: INTERIM RESULTS - chinaunicom.com.hk · Adjustments in mobile development priority delivered initial success Fixed-line business re -ignited rapid growth by empowering government

Appendix V: Deepened Cooperation with Strategic Investors (1)

33

Capital Cooperation 5G

Yunlizhihui YunjingCulture & Tourism Smart Steps

• Baidu• Established “5G+AI Joint Laboratory”

• Actively promote the commercialisation of autonomous driving applications based on 5G edge computing

• Tencent• Established “5G e-Sports Joint Laboratory”

• Rolled out 5G network slicing trials in various verticals

• JD.com• Explore new 5G applications targeting

logistics industry & industrial parks

• Rolled out 5G network slicing trials in various verticals

• Alibaba• Focus on UHD video applications in 5G era

Synergetic & powerful alliance with ever innovating cooperation models

• Upgraded smart products such as Smart Rivers & Lakes, Urban Brain, etc.

• Won >30 projects in 1H2020

• Established product portfolio with customisableindustry products & modules based on the core product platforms

• Won numerous projects nationwide

• Actively explore 5G edge computing applications

• Jointly built models & leveraged each other’s data to offer Big Data (financial, travel services and others) products, serving a number of government ministries & Global 500 enterprises, etc.

Environmental conservation &

smart cities

Tech + culture + tourism

“Demographic+”, connecting “people, things & enterprises”

2020 Interim Results

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Appendix V: Deepened Cooperation with Strategic Investors (2)

2020 Interim Results 34

• Enhanced extensive cooperation in fundamental telecom services with strategic investors, e.g. China Life, Alibaba, Tencent, Baidu & JD.com

• In 1H2020, revenue of telecommunication services provided by China Unicom to its strategic investors 23% YoY

Telecommunications

• Cooperated with Alibaba & China Life on smart watch, digital insurance, etc. & continuously explored cooperation in ecology & channels, innovation & incubation, etc. with strategic investors

• Engaged in comprehensive cooperation with Alibaba, Tencent, JD.com & other strategic partners in mobile payment, travel services & smart wearable, etc. with nearly 20 mil smart connections

IoT

• Drove development of WO Cloud A & WO Cloud T (co-branded public cloud products) through “Cloud Fibre Smart Enterprise” project with nearly 130k customers

• In-depth cooperation with Alibaba on Ding Talk with 130k corporate customers & 52 mil users

• Continuous effort in exploring edge computing & CDN cooperation with strategic investors

Cloud Computing

Leverage partners’ strength to boost new energy for innovative development

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• WO Wallet forged online cooperation with e-commerce platforms of JD.com, Alibaba & Suning, etc

• Jointly promoted instalment credit services with Ant Financial

• Cooperated with JD.com to jointly launch credit score products

Appendix V: Deepened Cooperation with Strategic Investors (3)

35

• Further expanded Internet touchpoints & privilege cooperation with Tencent, Alibaba, Baidu, JD.com & Didi, etc.

• Made use of e-vouchers to launch cross-sector cooperation with Alibaba, JD.com & Suning.com

• Fundamental telecommunication capabilities deeply integrated with the smart hardware & household applications of Internet companies such as Baidu, Alibaba & Tencent, creating new & competitive products while meeting user demand, and enhancing pan-smart terminal sales

• Deeply cooperated with Baidu’s iQiyi, Tencentvideo, and Alibaba’s Youku on IPTV & mobile video content, creating high quality premium video services leveraging 5G & gigabit broadband capabilities

Touchpoint Payment and Finance

Content Aggregation Smart Home

Leverage partners’ strengths to boost new energy for innovative development

2020 Interim Results

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Appendix VI: China Unicom 5G Industry Applications

5G pilot IoV

5G + smart port 5G drone with 4K HD VR demo on river inspection

Remote first-aid coordinated among 3 locations

5G + thermal imaging body temperature screening

5G industrial Internet

5G epidemic prevention & control robot

2020 Interim Results 36

5G autonomous public transport